That Sinking Feeling You’re Paying Too Much
Ever get that nagging sense after writing a big check to the IRS that something’s off? You’re not imagining things. Plenty of business owners hand over thousands more than they actually owe each year. And here’s the frustrating part—most have no idea it’s happening.
The tax code is massive. We’re talking about tens of thousands of pages of rules, deductions, and credits that change constantly. Missing even a few opportunities adds up fast. If you’ve been handling your own taxes or working with someone who doesn’t really dig into your situation, you might be leaving serious money on the table.
So how do you know if this applies to you? Working with a Tax Company in Garden City NY can help identify these issues, but first, let’s look at the warning signs that suggest you’re overpaying.
Sign 1: You Haven’t Updated Your Business Structure in Years
When you started out, maybe a sole proprietorship or simple LLC made sense. But businesses change. What worked when you were making $50,000 might cost you thousands now that you’re pulling in $150,000 or more.
Here’s the thing about self-employment taxes—they hit hard at 15.3% on your net earnings. An S-Corp election could slash that burden significantly for profitable businesses. But tons of owners stick with their original structure because changing feels complicated.
If your accountant hasn’t brought up entity restructuring in the last couple years, that’s a red flag. Tax Services in Garden City NY professionals should regularly review whether your current setup still makes sense.
Sign 2: Your Home Office Deduction Is Missing or Wrong
The home office deduction trips people up constantly. Some skip it entirely because they’ve heard it triggers audits. Others use the simplified method when the actual expense method would save them way more.
Quick reality check: if you use part of your home regularly and exclusively for business, you qualify. Period. The simplified method gives you $5 per square foot up to 300 square feet. That’s a max of $1,500.
But what if your actual expenses—mortgage interest, utilities, insurance, repairs—allocated to that space total $4,000? You just lost $2,500 in deductions by taking the easy route. A proper calculation takes more work, but the savings can be substantial.
Sign 3: You’re Not Tracking Mileage Properly
Business mileage at 67 cents per mile for 2024 adds up fast. Drive 15,000 business miles and that’s over $10,000 in deductions. But without proper logs, you’re either guessing low or risking problems if audited.
Many business owners estimate their mileage at tax time. They usually lowball it. Think about all those trips—client meetings, bank runs, supply pickups, networking events. Without real-time tracking, you forget half of them.
Apps make this easy now. But if you’ve been winging it, you’ve probably underclaimed this deduction for years.
Sign 4: Your Retirement Contributions Are Minimal
Retirement accounts aren’t just for building your nest egg. They’re powerful tax reduction tools that many business owners barely use.
A SEP-IRA lets you contribute up to 25% of net self-employment income, maxing at $69,000 for 2024. A Solo 401(k) can go even higher with the employee contribution piece. Yet tons of small business owners put in a few thousand dollars and call it a day.
JB Luzim & Company and other tax planning experts often find that maximizing retirement contributions is one of the fastest ways to reduce a client’s tax bill while simultaneously building wealth.
If nobody’s run the numbers on what you could actually contribute, you’re probably underfunding these accounts.
Sign 5: Equipment Purchases Aren’t Optimized
Bought a $30,000 vehicle for business last year? How it’s deducted matters enormously. Section 179 lets you write off the full cost immediately in many cases. Bonus depreciation offers similar benefits. Standard depreciation spreads it over years.
The right choice depends on your income, other deductions, and future projections. Pick wrong and you might pay more tax this year than necessary—or miss out on deductions entirely.
Same goes for computers, furniture, machinery, and other business assets. Timing these purchases strategically around year-end can shift significant deductions between tax years. Tax Planning in Garden City NY requires this kind of forward thinking.
Sign 6: You’re Missing Health Insurance Deductions
Self-employed folks can deduct health insurance premiums for themselves, spouses, and dependents. This isn’t an itemized deduction—it comes right off your adjusted gross income.
But the rules get specific. The deduction can’t exceed your net self-employment income from the business under which the plan is established. If you have multiple businesses or also qualify for employer coverage elsewhere, things get complicated.
Many business owners don’t claim this correctly. Some miss it completely. Others don’t realize they can include dental and long-term care premiums too.
Sign 7: Your Books Are a Mess
Disorganized financial records don’t just stress you out at tax time. They actively cost you money.
When receipts are lost and transactions aren’t categorized properly, deductible expenses get missed. That $200 client dinner becomes invisible. The $500 software subscription gets lumped into some generic category nobody reviews.
A Tax Company in Garden City NY can only work with what you give them. If your records are incomplete, your deductions will be too.
Clean books throughout the year—not just scrambling in April—make it possible to capture every legitimate deduction.
Sign 8: You’ve Never Had a Tax Planning Session
Tax preparation and tax planning are different things. Preparation looks backward at what already happened. Planning looks forward to minimize future taxes.
If your only tax conversation happens after December 31st, you’ve missed most opportunities for that year. Strategic decisions about income timing, expense acceleration, estimated payments, and year-end purchases need to happen while you can still act on them.
Quarterly or at minimum annual planning sessions—ideally in November—let you make moves that actually reduce what you owe. Without this proactive approach, you’re just reacting to whatever your situation happens to be.
What Overpaying Actually Costs You
Let’s put real numbers to this. Say you’re missing $15,000 in legitimate deductions because of these issues. At a 24% federal bracket plus state taxes, that’s potentially $4,000 or more in extra tax paid annually.
Do that for five years and you’ve handed over $20,000 unnecessarily. Money that could have grown in your retirement account, funded business expansion, or just made life easier.
The compounding effect makes this worse over time. For additional information on building better financial habits, small improvements in tax efficiency create significant long-term differences.
Frequently Asked Questions
How do I know if I need a tax professional or can file myself?
If your situation involves self-employment income, rental properties, investments beyond basic stocks, or any business deductions, professional help typically pays for itself. The complexity threshold where DIY becomes risky is lower than most people think.
Can I amend past returns if I missed deductions?
Yes, you have three years from the original filing deadline to file amended returns. If you discover significant missed deductions from recent years, it’s worth going back to claim them.
How much should tax preparation and planning cost for a small business?
Costs vary widely based on complexity, but quality tax work for a small business typically runs $500-$2,500 annually. The right professional should save you multiples of their fee—if they don’t, that’s another warning sign.
What’s the difference between a CPA, enrolled agent, and tax preparer?
CPAs and enrolled agents can represent you before the IRS and typically have deeper training. Tax preparers have varying qualifications. For business returns with any complexity, working with credentialed professionals generally provides better results.
When should I schedule a tax planning meeting?
October or November gives you time to make year-end moves while they still matter. Waiting until January means most opportunities for the prior year have already closed.
Taking Action Before It Costs More
Recognizing these warning signs is step one. Actually doing something about them is where the savings happen. Whether you tackle some of these issues yourself or bring in professional help, the key is not letting another tax year slip by with the same preventable overpayments.
Your business works hard to earn that money. Making sure you keep as much as legally possible isn’t just smart—it’s necessary for long-term success.
